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The unknowns about the future of fashion, between fast fashion and sustainability goals

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The unknowns about the future of fashion, between fast fashion and sustainability goals

The profit warning launched by Zalando on Friday 24 June, which had very negative effects on the stock of the Frankfurt-listed fashion e-commerce platform, may not be a wake-up call only for digital native companies and brands. Considering the sector in which the portal operates, clothing and accessories, you can broaden your gaze.

The recovery of the top of the range

In 2021 and in the first part of 2022 at the latest, the vast majority of medium-high and high-end brands returned to pre-pandemic turnover and profitability levels and in some cases surpassed them, thanks to a balanced mix of channels. sales: the strong recovery in retail slowed the growth of online sales, but it was not a true cannibalization. Rather, from the evolution towards multi-channel, with physical and digital stores that aim to offer the same type of shopping experience, of contact with a brand and its values, its style, even before its products. So much so that Marco Palmieri, founder and president of the Piquadro group, an entrepreneur who has always been a precursor of changes, recently asked himself whether it is still worthwhile to segment sales by channel or whether it is better to consider them as a whole, also because there is no algorithm that can explain who has chosen to buy online after visiting a store or, vice versa, who finalizes in presence a desire born on the web.

The revenge of physical retail

And here is a first link with the problems of Zalando and other platforms: despite some attempts (Jeff Bezos also tried opening physical bookstores and supermarkets), the business model is based almost exclusively on online sales and shipments. Many big brands took advantage of the pandemic and lockdowns to understand how digital tools could improve the physical experience once stores reopened. It is not just about Crm or devilry, such as virtual dressing rooms or interactive touchscreens, which have not broken through. For example, there has been a move to put the logistics built around e-commerce at the service of physical sales spaces, in many cases reducing the fixed costs of shops with department stores. A process that cannot take place in the other direction.

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The cost of returns and logistics

The unnecessary movement of goods has always been a big problem for fashion e-commerce: to win customers, starting twenty years ago, when Yoox was born, everyone was promised free returns and with very long lead times. The result? Many, even today, buy three sizes of the same dress, to make sure they have the right one, and invariably return two. It is no longer so simple to send back at no cost and the times to do so have decreased, but logistics and transport – with all the costs for the environment that they entail – remain a very high cost for platforms that promise deliveries to hundreds of countries in a few hours or days. This involves extra transport and warehouse costs in each geographic area.

Sustainability and transparency

And here we come to the most important unknown that weighs on the fashion industry, from fast fashion to luxury: sustainability. Giants such as H&M, Inditex, Mango and Ovs in Italy are multiplying their efforts to reduce the impact on the environment, investing in processes and materials, but the original sin remains. The model was called fast due to the speed of time-to-market and the monthly if not weekly restocking of the stores, done to stimulate purchases with the news, as well as with the price. To the investigations that revealed how the model was also based on the absence of social sustainability (euphemism, because there are those who speak of authentic exploitation of child labor and developing countries in general), companies – especially listed ones – reacted by increasing transparency and traceability. But it might not be enough: the new generations seem to be satisfied with fashion more quickly than those who preceded them, they prefer a garment that costs ten times the price but lasts over time. A change that also touches on luxury, where platforms and in-store reselling services flourish, to give a second life to what has bored us, but that we don’t want to throw away. It is not yet a circular model, but it could become one (it is extending from luxury to mid-range) and perhaps once again fashion will accelerate changes in society.

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